• On-chain data shows that Ethereum realized volatility has now declined to rare levels observed only three times before in history.
• The one-month realized volatility is an indicator that measures the standard deviation of daily returns from the mean for the market in question.
• Low values of the metric suggest returns haven’t deviated much from the mean, and hence that the price has been stuck in stale consolidation.
The on-chain analytics firm Glassnode recently reported that Ethereum’s „realized volatility“ is at a historically low level, suggesting that the market is currently providing a low trading risk. Realized volatility is an indicator that measures the standard deviation of daily returns from the mean for the market in question. Generally, the most useful timespans for this metric are the one-week and one-month versions.
The one-month realized volatility for Ethereum has now dropped to just 39.8%, a level that has only been seen three times before in history. This suggests that the past month has had very little diversity in the price of Ethereum, and that the returns have not deviated much from the mean. This indicates that the price of Ethereum has been stuck in a state of consolidation, with no major price changes taking place.
As a result, analysts believe that Ethereum’s price could be ready for a breakout, as the low volatility implies that the market is becoming increasingly stable. This could lead to more investors entering the market, as they see it as a safe investment option. Furthermore, the low volatility indicates that the price of Ethereum is unlikely to crash suddenly, as the market is not as volatile as it used to be.
On the other hand, some analysts argue that the low volatility could be a sign of stagnation in the Ethereum market, as there may not be enough market activity to drive prices higher. Nevertheless, it seems that the low volatility could be a positive sign for Ethereum in the long run, as it indicates that the market is maturing and becoming more stable.